Economic Environment of Business

Notwithstanding the public policy response to the economic recession, business performance will continue to deteriorate.

Global Overview

Recession can be defined as the reduction of a country’s gross domestic product (GDP) for at least two quarters. According to Wikipedia, it is a period of reduced economic activity, hence, a business cycle contraction. Recession has many attributes that can occur simultaneously. This includes decline in coincident measure of activities such as employment, investment and corporate profits.

It’s worthy to note that there is no commonly accepted definition of global recession. The international monetary fund (IMF) states that a global recession is that which causes a slowdown in global growth to 3%or less. The last period that qualifies for such since 1985 is 2001-2002. At such, the current recession affects a substantial number of nations as at early 2009. US entered a recession at the end of 2007 and many more nations followed suit in 2008.

August 2007, the inability of household to make higher payment on adjustable mortgage resulted in subprime crisis, tight credit standards of US financial institutions due to deteriorating balance sheets further resulted in widespread credit contraction. Loss of consumer confidence and precipitous decline in consumption caused sharp declines in economic activities as demand was generally low. These interplay threaten a recession because of increase in general prices, declining real output growth, weakened financial systems that resulted in bankruptcy and take over , loss of jobs through layoffs and downsizing of firms to reduce cost of operations and crash of stock market. The loss of confidence means inability of financial market to intermediate between the deficit and surplus sectors of the economy.

Fall in private consumption means that consumer confidence is low, and wealth eroded as a result of drop in values of houses, pension savings decimated in stock market. An estimate of 2.6million jobs were eliminated with 533000 lost in November 2008 alone. Few countries have seen rate of GDP growth decrease and this is generally attributed to liquidity, sectorial price inflation in food and energy. Hence most economies are experiencing slowdown in growth due to financial crisis

Bringing It Home

Nigeria is not isolated from the meltdown because of the ripple effects. The meltdown in global market is a global phenomenon and the character of volatility on the exchange is indicative of the global malaise. Oil which accounts for more than 90 percent of country’s income trades around $40 per barrel, down from its 2008 high of $145; Nigerian foreign reserve fell by $8 billion to $49billion at march 2009.

The cantankerous scenario is compounded by the fact that most Nigerian banks naively took collaterals of share certificate on loans to speculate in the stock market. The global financial crisis and economic downturn has impacted negatively on business economic environment by exposing consumers to shock because equity prices plummeted to an all time low. Market capitalization which determines equity values in the market dropped by 137.7 percent from an all time high of 12.6 trillion in mid march 2008 to 5.286 trillion at march 2009. Investors lost over 8 trillion naira within the last ten months thus raising fears among Nigerians that the market might not pick up in the near future.

In response to the looming financial crisis, a number of public policies have been put in place to mitigate the financial crisis. The aim of which is to stimulate aggregate demand and increase consumption. The various public policy response includes

...Economics Terminology
Economics; It concerns
a) Allocation of society’s scarce resources among alternative uses & the distribution of society’s output among individuals & groups at a point in time.
b) The way in which allocation & distribution change over time.
c) The efficiencies & inefficiencies of economic systems.
Since the real world is so complex, when economists face a problem, where they have to make a decision, they first start by making simplifying assumptions where they build a model much simpler than the real world. If the model was done properly, then it should predict how the real world will behave.
A basic assumption in economics, is that economic players behave rationally. It means that once they’ve selected their objectives, they will try to achieve them in a rational way.
Therefore individuals believe in is “utility” maximization, which refers to any objective that leads to satisfaction of the economic player. Thus paying to charity may lead to utility maximization.
What is managerial economics?
Managerial Economics is a marriage of economics & decision sciences in order to solve complex business problems. This applies for both private firms & public institutions. According to Keat & Young it is “the use of economic analysis to make business decisions involving the best use of...

...economy.
Task 1 : You are required to identify different types of market structure , and explain how market structure determine the pricing and output decision of business :
There are many types of markets:
* Perfect competition
* Monopolistic competition
* Oligopoly
* Monopoly
* Duopoly
Perfect competition
Perfect competition can be described as competitive depends in part on how many suppliers are seeking the demand of consumers and with a new businesses can enter and exit a particular market in the long run. In a market economy, competition occurs between large numbers of buyers and sellers who vie for the opportunity to buy or sell goods and services.
Perfect competition exists when there are so many people in the market, and other conditions are such, that no-one can influence the price, all other things being equal.
Monopolistic competition is when a large number of firms sell closely related but not homogenous products. There are three ways:
* There are many buyers and sellers
* Entry and exit are easy
* Firms take other firms price as given
Oligopoly is when there are a few large suppliers, and business decisions affect each other.
Monopoly is a businessenvironment in which a single company, by controlling a specific supply of products or service, set prices, prevents other business from entering the market and controls the available supply of the product or...

...Title:
BusinessEconomics
Programme
Business Management
Business Management (Travel & Tourism)
Management with Human Resource Management
Business Management and Information Technology
Human Resource Management with Information Systems
BSc Accounting and Finance
BA Accounting and Finance
Oil and Gas Management
Law with Management
Business Studies
Level:
Level 4
Awarding Body:
University of Plymouth
Module Leader
Francisco Marco-Serrano
Format:
Individual Report
Presentation:
No
Any special
requirements:
All work should be submitted on the Student Portal along with an
acceptable Turnitin Report
Word Limit:
1,750 words each (+ or – 10%)
Deadline date for
submission:
6.30pm, 11 April 2014
Learning outcomes to
be examined in this
assessment
a) Identify the nature of resource cost structure and the practical
significance of different costs;
th
b) Explain the factors influencing optimum size and the significance of
demand and supply relationships;
c) Demonstrate an understanding of the relevance and limitations of
economic theory to management decisions.
Percentage of marks
awarded for module:
The individual report is 50% of the total mark s for the module.
Assessment criteria
Explanatory comments on the assessment
criteria
Maximum marks for
each section
Content, style,...

...﻿These are Discussion questions for BusinessEconomics 150 ward count for each question
1. For many years (actually centuries), the dominant Christian church of the world forbade anyone to print a copy of the Bible in any language other than Latin. After the invention of the printing press, several people printed the Bible in languages other than Latin (including German and English) without permission. Some of those people were convicted and executed. Is this a warning to those who fear that others may understand Scripture differently than the religious leaders of the time? Can this be compared to leaders of firms with monopoly power who try to impose their wishes on the market even if that does not allow free flow of products?
The Bible was originally written in Hebrew for the Old Testament and in Greek for the New Testament. At first, there was fear of corrupt translations. Before the invention of the printing press, all copies had to be done hand written and the church had also banned unauthorized translations. However, later with invention of the printing press, people like William Tyndale were able to print several thousands of copies. The reason for the banned translations was also in an attempt to prevent the rise of English Lutheranism; English rulers forbade printing of the Bible.
Yes. This is very comparable to monopolistic leaders who would wish to impose their wishes on the market despite of the fact that it may not be allowing free...

...and are targeted at a slightly niche market (upper middle to upper class citizens). M&S also have a commitment called Plan A, in which they are devoted to environmental issues such as refusing to send waste to landfills and using alternatives methods of waste disposable such as recycling within the business where possible and also externally, as well as lowering carbon emissions when possible. These things will help them save money, however the main reasoning for these policies M&S have issued are to increase the their appeal in the eyes of the public, therefore making people think that they are helping the environment if they shop with them. Which they are but only to a certain extent.
These policies are in force as the government have fiscal and monetary policies that effect all businesses and the way they operate, including M&S. An example of a fiscal policy would be direct taxation, this can come in the form of corporation tax which is currently set at 20%. The level of which corporation tax is set at can effect a business hugely, as if they are set low it means that M&S won’t have to pay as much interest on their profit and will have more money to re-invest into the business. This could be into for example, hiring more staff as a result of an increase in demand. This means if M&S carried out hiring more staff alongside other businesses throughout the UK as a result of an increase of stimulation in the economy...

...Economic Growth- GDP
Economic Growth…
…An increase in an economy’s ability to produce goods and services
Gross Domestic Product- represents the value of a country’s national income in one year.
An increase in real GDP means that the standard of living within a country is increasing. It is therefore used as a way of measuring a country’s economic growth.
The Business Cycle- there are discernable patterns in these levels over time, there will be periods of time when economic activity is rising and other times when the level of economic activity slows down.
The Business Cycle
The Four Stages of the Business Cycle are:
Boom: A period of very fast economic growth, with rising incomes and profits. Inflation will rise and there will be shortages of key skilled worker, leading to high wage increases. High inflation will make the country less competitive, and business confidence will eventually fall due to rising cost.
Interest rates are increased to slow down growth.
Recession/Downturn: Demand stats to fall as interest rate rise. Real GDP stats to slow and will eventually fall. Incomes and demand fall, as do profits. Some firms will be forced out of business.
Possible Strategies during a recession:
• Close down arts of the business and make redundancies
• Develop new products that appeal to...

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Assignment
On
BusinessEnvironment
Contents
Introduction
Businessenvironment refers to the combination of external and internal factors influence the organization of the operating conditions. There are several factors of the customer and the businessenvironment, such as suppliers, technology, law and government activity and the market, social and economic trends competitions and owner, is improved.
Task 1: The Contextual Environment:
1. a Identify the Purpose of Different Types of Organization:
There are different types of organizations in the business world. All organizations have grown different purposes. Aviation, telecom organizations, foods etc is the purpose of profit in a standard way socially. A not-for-profit service organization such as the University aim is to help all people without any profit. Such as clubs, labor unions, etc. The purpose of the organization of mutual benefit is to join together to pursue their own self-interest. The public welfare organization such as the police, fire service, provides services to all members of a given population.
Premier Food and Vodafone as the case may be, their main purpose is to maximize business and their profits by providing goods or services to their customers in order to maximize the wealth of your organization.
Input process...